We could introduce this year’s i-merchant 40 listing of the top online marketers with some sort of golly-gee statement about how quickly the Web has grown as a commerce channel. But you’ve surely read that type of pontificating elsewhere, so we’ll get to the crux of the matter.
Compiling a ranking of top i.merchants during this embryonic phase of e-commerce is neither easy nor foolproof. For one thing, a lot of companies are shy about reporting their e-commerce revenue, and not just in the traditional “for competitive reasons, we don’t break out those types of numbers” sense of corporate culture. In some cases, it’s because they are still defining what e-commerce is.
Take, for example, the huge, established computer and electronics companies, including Cisco Systems, Intel, and Ingram Micro. Almost from their inception, they’ve used electronic data interchange (EDI) systems, which allow salespeople and clients to interactively track inventory, sales, shipping, and reordering. In most cases, this is a real-time, online way of doing business. But is it the same as a mom clicking onto Amazon.com and ordering the latest Harry Potter book for her daughter? Most of the b-to-b companies in our ranking consider it so.
Because the ways and means of tracking and reporting online sales vary so dramatically among companies, in many cases Wall Street analysts and research firms are left to make educated guesses. That situation is likely to change, however, as online advertisers start insisting on audited measurements of buyer visits and spendingÑmuch as TV, radio, and print advertisers have for decades.
Meanwhile, a Department of Commerce report, “Digital Economy 2000,” released in June, reports that ongoing surveys by the Census Bureau will now measure business-to-consumer e-tailing and have begun to look at the more elusive business-to-business segment.
And the University of Texas at Austin’s Center for Research in Electronic Commerce (CREC) has been working with Cisco to develop what they call the Internet Economy Indicators. The model seeks to provide a foundation for conceptualizing and measuring the various components of the Internet economy, which it divides into four distinct but related layers: Internet infrastructure, Internet applications, Internet intermediaries, and Internet-based transactions or online sales. For 1999, they found that the Internet economy grew 62% from the previous year, to $523.9 billion, and they estimated that it could grow to $850 billion in 2000.
“E-commerce soared in 1999, increasing 72%, to $171.5 billion,” the CREC reported in June. “To put that into perspective, the e-commerce portion of the Internet economy alone tops the banking, aerospace, and drug industries in revenues.”
An e-tailing study conducted for industry group Shop.org by the Boston Consulting Group, “The State of Online Retailing 3.0,” concludes that the consumer online market reached $33.1 billion in 1999, a number predicted to leap 85% this year, to more than $61 billion.
But business-to-business is where the huge growth will be. A recent study by Jupiter Communications states that the U.S. market for businesses buying and selling goods to each other will balloon to $6 trillion by 2005 from $336 billion now. Internet trade will represent about 42% of all b-to-b commerce, compared to 3% today, according to the study. In fact, the leaders on this year’s top 40 are, as was the case last year, predominantly giant bricks-and-clicks companies that sell primarily to other businesses. And once again, online sales of computers are a significant force in the online marketplace. Dell’s Internet sales, for instance, represent more than 44% of its overall revenue, and Gateway’s nearly 25%.
As this year’s volatile stock market indicates, the winners and losers in the e-commerce world will sort themselves out in due time. But there are no signs that the overall buying and selling of products online is going anywhere but up.
|Rank||Company||Address/Telephone||Market segment||1999 Sales $million||1998 Sales $million|
|1||IBM||White Plains, NY, 914-642-6209||computers||$87.55 billion||$14.80 billion|
|2||Intel||Santa Clara, CA, 408-765-8080||computer components||$29.39 billion||$13.00 billion|
|3||Dell Computer||Round Rock, TX, 512-338-4400||computers||$25.27 billion||$11.19 billion|
|4||Cisco Systems||San Jose, CA, 408-526-4000 a||networking equipment||$12.15 billion||$10.57 billion|
|5||Ingram Micro||Santa Ana, CA, 714-566-1000||technical components||$28.07 billion||$5.60 billion*|
|6||Microsoft||Redmond, WA, 425-882-8080 b||software||$19.75 billion||$5.50 billion*|
|7||Gateway||San Diego, 858-799-3401||computers||$8.65 billion||$2.16 billion*|
|8||Sun Microsystems||Palo Alto, CA, 650-960-1300||computers & components||$13.12 billion||$2.00 billion*|
|9||Tech Data||Clearwater, FL, 727-539-7429||computers & components||$16.99 billion||$1.90 billion*|
|10||Compaq Computer||Houston, 281-370-0670||computers||$38.53 billion||$1.85 billion*|
|11||Amazon.com||Seattle, 206-622-2335||general merchandise||$1.64 billion||$1.64 billion|
|12||Avnet||Phoenix, 480-643-2000||industrial components||$9.20 billion||$1.38 billion|
|13||Arrow Electronics||Melville, NY, 516-391-1300 b||computers & components||$9.31 billion||$1.10 billion|
|14||Micron Electronics||Nampa, ID, 208-893-3434 c||computers||$1.44 billion||$1.00 billion|
|15||Buy.com||Aliso Viejo, CA, 949-425-5200||general merchandise||$596.8 million||$596.8 million|
|16||Egghead.com||Menlo Park, CA, 509-922-7031||computers||$514.8 million||$503.2 million|
|17||Hewlett-Packard||Palo Alto, CA, 650-857-1501 d||computers||$42.37 billion||$500.0 million*|
|18||Office Depot||Delray Beach, FL, 561-438-4800||office supplies||$10.26 billion||$349.7 million|
|19||Micro Warehouse||Norwalk, CT, 203-899-4000||computers||$2.44 billion*||$279.8 million *|
|20||eBay||San Jose, CA, 408-558-7400||general merchandise auctions||$224.7 million||$224.7 million|
|21||uBid||Elk Grove Village, IL, 773-272-5000||general merchandise auctions||$204.9 million||$204.9 million|
|22||Barnesandnoble.com||New York, 212-633-3300||books, music, gifts||$202.6 million||$202.6 million|
|23||W.W. Grainger||Lincolnshire, IL, 847-793-9030||industrial supplies||$4.53 billion||$200.0 million*|
|24||Cyberian Outpost||Kent, CT, 860-927-8350 e||computers||$188.6 million||$188.6 million|
|25||Value America||Charlottesville, VA, 804-817-7700||general merchandise||$182.6 million||$182.6 million|
|26||Apple Computers||Cupertino, CA, 408-996-1010 d||computers||$6.10 billion||$170.0 million*|
|26||Federated Department Stores||New York, 212-494-1602||general merchandise||$17.72 billion||$170.0 million*|
|28||CDnow||Fort Washington, PA, 215-619-9900||music & videos||$147.2 million||$147.2 million|
|29||Creative Computers||Torrence, CA, 800-863-3282||computers||$732.0 million||$139.0 million*|
|30||Insight Enterprises||Tempe, AZ, 602-902-1001||computers||$1.52 billion||$138.3 million|
|31||Lands’ End||Dodgeville, WI, 608-935-9341||apparel||$1.32 billion||$138.0 million|
|32||CDW Computer Centers||Vernon Hills, IL, 847-465-6000||computers||$2.56 billion||$125.0 million|
|33||PC Connection||Merrimack, NH, 603-423-2000||computers||$1.06 billion||$116.1 million|
|34||J.C. Penney||Plano, TX, 972-431-1000||general merchandise||$32.51 billion||$102.0 million|
|35||Staples||Westborough, MA, 508-370-8500||office supplies||$8.94 billion||$94.3 million|
|36||Multiple Zones International||Renton, WA, 425-430-3000||computers||$487.4 million||$90.2 million|
|37||L.L. Bean||Freeport, ME, 207-865-4761||outdoor gear & apparel||$1.03 billion*||$90.0 million*|
|38||Systemax||Port Washington, NY, 516-625-1555||computers & industrial supplies||$1.75 billion||$83.0 million*|
|39||Spiegel||Downers Grove, IL, 630-986-8800||general merchandise||$3.21 billion||$79.0 million|
|40||Getty Images||Seattle, 206-695-3400||photo images||$247.8 million||$67.9 million|
|(a) = year ended July 31, 1999;
(b) = year ended June 30, 1999;
(c) = year ended Sept. 2, 1999;
(d) = year ended Oct. 31, 1999;
(e) = year ended Feb. 28, 2000
The i.merchant 40 was compiled through public records, industry research sources, and the companies themselves. For companies that provided only approximate details regarding their online sales or none at all, the estimated figure is denoted with an asterisk.
Several companies report their results on a fiscal year that’s different from the calendar year. When the fiscal year varied from the calendar year by more than one month, we either backed out the financial data to obtain calendar-year sales, or we used the figures for the company’s fiscal year, as noted.
For companies that have multiple Websites, such as Systemax, the sales figures include revenue from all the sites and divisions.
As for which types of companies are included, we’ve limited eligible companies to those that sell products, as opposed to services. That’s why companies such as financial services provider Charles Schwab (estimated online sales of $2.6 billion), travel services provider Travelocity (online sales of roughly $800 million), and United Airlines (an estimated $600 million in Internet sales) do not appear on the i.merchant 40.
Other services providers that could have made the list, but didn’t, include:
- Netmarket Group (a division of Cendant, with estimated online sales of $992 million)
- TD Waterhouse (an estimated $634 million in online sales)
- E*Trade ($621.4 million in Web and total revenue)
- FMR (a division of Fidelity Investment with an estimated $520 million in online revenue)
- Northwest Airlines (estimated Web sales of $514 million)
- Priceline.com (online and total revenue of $481 million)
- Wells Fargo (an estimated $277 million in online revenue)
- Ameritrade Holdings (Web and total revenue of $268.4 million)
- DLJ Direct (online and total revenue of $238.1 million)
- CitiGroup ($233 million in Web revenue).
We’ve also excluded car dealers such as Carsdirect (approximately $400 million in both Web and total sales) because, strictly speaking, such Websites act as a middleman between the buyer and the dealer that is actually supplying the automobile.
Bob Woods, a freelance writer based in Madison, CT, is a contributing editor at Promo magazine.